Carbon Offsets

By Jim Manzi

Megan McArdle makes the obviously correct point that CO2 offsets are basically nonsense because of measurement problems. I'm a lot more cynical about human nature. If I were a businessman in any developing country, I would simply start building low-cost CO2 generating devices, and then start selling the 'offset' of turning them off.

The advantage of this to the developed world is that since the idea is
so obvious, lots of other people would do the same, and this would
drive the price of offsets down. Of course, some cost would be created
by the need to disguise this at least a little bit (e.g., embed the
generator within some actual production facility, do it by buying a
negative cash flow existing factory, etc.). This would lead to a
requirement, I assume, for government certification by the host
government. So really the cost structure would be the bribes required
to get the government to certify my offset. This would create the
price umbrella for the market. Once all the middlemen are accounted
for, it would also make clear what the whole offset business really is
- a way to bribe influential members of third-world government to go
along with the cap-and-trade fiasco.